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Supply chain network is complicated to manage due to the involvement of a number of agents. Formation of virtual organization using Industry 4.0 (I4.0) is an approach to improve the efficiency and effectiveness and to overcome the complexities of the channel. However, the task of managing the channel further becomes complicated after incorporating sustainability into the supply chain. To fill this gap, this paper focuses on designing of mechanism and demonstration of I4.0-based virtual organization to coordinate sustainable supply chain.

In this paper, we model and compare I4.0-based virtual organization models using four other traditional contracts with centralized supply chain. The non-cooperative game theoretic approach has been used for the analysis of models.

Our game-theoretic analysis shows that investment in I4.0 and sustainable innovation are beneficial for the overall supply chain. Our results show that linear two-part tariff contract and I4.0-based virtual organization model can perfectly coordinated with the supply chain.

This study consider deterministic model settings with full information game. Therefore researchers are encouraged to study I4.0-based coordination models under information asymmetry and uncertain situations.

The paper includes implications for the development of I4.0-based coordination model to tackle the problems of channel coordination.

This study proposes I4.0-based game-theoretic model for the sustainable supply chain coordination.

This paper aims to develop a coordination mechanism that can be applied to achieve the channel coordination and information sharing simultaneously in the fresh agri-food supply chain with uncertain demand. It seeks to elucidate how the producer can use an option contract to transfer the risk caused by uncertain demand, impel the retailer to share demand information and improve the performance of supply chain.

An option contract model based on the basic model of fresh agri-food supply chain is introduced to compare the production, profit, risk and information sharing condition of the supply chain in different cases. In addition, a case study focusing on the sale of autumn peaches produced by a local producer is investigated, which provides evidence of the applicability of the authors’ approach.

The optimal option contract can help the supply chain achieve channel coordination and reach Pareto improvement. In the meantime, such a contract will encourage the retailer to share market demand information with producer spontaneously and help maintain the strategic cooperation between two parties.

This paper considers a single-producer, single-retailer system and both of them are risk neutral.

Presented results can be used as suggestions for improving the contract design of fresh agri-food supply chain in China and can also provide references for other countries with similar experiences as China in fresh agri-food production.

This research introduces the option contract into fresh agri-food supply chain and takes information sharing and the risk caused by uncertain demand into consideration.

Long-term contract is an important developing direction of China's coal industry coordination. This paper aims to discuss how to use contract for difference (CFD) to avoid risk and effectively increase the benefit of both coal and thermal power plants in the coal-electricity supply chain.

Based on prospect theory, this paper takes the risks and benefits of the coal and coal-fired power plants in the coal supply chain under CFD into balanced consideration to construct the contract coordination mechanism. In this mechanism, the coal demand in the coal supply chain equilibrium under centralized decision-making is regarded as the total annual volume of transactions needed to design the contract coordination mechanism and solve double marginalization. Then, based on prospect theory, in the construction of CFD, this paper takes the income of power and coal enterprises when they are in equilibrium under Stackelberg non-cooperative game as the reference point. In addition, considering that coal demand is a random variable, the CFD with a one-year trading session can be designed.

The research derives the coal price of the contract for difference, contract trading volume and its proportion of the total trading volume. A numerical example shows that the model above can be used to effectively avoid the risk of both coal and electricity sides.

To solve the conflict between coal enterprises and thermal power plants, let the coal-electricity supply chain be converted from non-cooperative game to cooperative game. Based on the prospect theory, this paper takes the income of the non-cooperative game of coal and thermal power plants as a reference point and considers how to design the coordination mechanism, the contract for difference, so as to make the two parties cooperate to solve the double marginal utility of the non-cooperative game in a chain supply. The main innovation of the work lies in the following: first, the coal demand when the coal-electrical supply chain is in balance under centralized decision-making is taken as the total annual trading volume needed to design the contract coordination mechanism and solve double marginalization. Second, based on prospect theory, in the construction of CFD, the benefits of coal-fired power plants and coal enterprises when both sides are in equilibrium under the Stackelberg non-cooperative game are taken as the reference points, and coal demand is taken as a random variable to design the CFD with a one-year transaction period. The price of coal that is not traded through CFD is calculated according to the daily market price. Third, this paper proposes the prospect M-V criterion of the risk-benefit equilibrium of both power and coal enterprises, which means that the risk-benefit equilibrium of both sides is the prospect variance effect of both sides relative to the reference point benefit divided by the prospect expectation effect.

A lack of visibility into the manufacturer’s production cost information impedes a retailer’s ability to maximize her own profits, especially when market demand is uncertain. The purpose of this paper is to investigate the use of an option contract within a one-period two-echelon supply chain in the presence of asymmetric cost information.

Based on the principal-agent model, the retailer, acting as a Stackelberg leader, offers a menu of option contracts to mitigate the risk of uncertain demand and reveal asymmetric production cost information. The optimal contract in asymmetric and symmetric information scenarios is derived. Finally, the impact of production costs on the optimal contracts and the actors’ profits is explored by numerical experiments.

By comparing the optimal equilibrium solutions in two scenarios, the authors show that asymmetric cost information has a large impact on the optimal option contract and profits. In addition, information rent is affected by the type differential. The results prove that the level of information asymmetry plays a vital role in option contracts and profits.

Different from the existing literature on private demand information, this paper considers a supply chain with asymmetric cost information in the context of option contracts. Interestingly, not only the production cost but also the probability of a low production cost can affect the option strike price. In addition, from the perspective of the manufacturer, a high cost does not always bring a high information rent. These findings can provide some guidance to decision-makers.

The purpose of this paper is to value put option contracts in hedging the risks in a supply chain consisting of a component supplier with random yield and a manufacturer facing stochastic demand for end products.

This paper adopts stochastic inventory theory, game theory, optimization theory and algorithm and MATLAB numerical simulation to investigate the manufacturer’s ordering and the supplier’s production strategies, and to study the coordination and optimization strategies in the context of random yield and demand.

The authors find that put options can not only facilitate the manufacturer’s order but also the supplier’s production, that is, the manufacturer and the supplier can effectively manage their involved risks and earn more expected profits by adopting put options. Further, the authors find that the single put option contract fails to coordinate such a supply chain. However, when combined with a protocol, it is able to coordinate the supply chain.

This paper is the first effort to study the intersection of put option contracts and random yield in the presence of a spot market. From a new perspective, the authors explore the supply chain coordination. The authors propose a mechanism to coordinate the supply chain under put option contracts.

There are particularly high fresh agricultural product (FAP) loss rates in actual supply chain operation and the development of FAPs e-commerce is hindered to some extent. The purpose of this paper is to achieve the coordination of three-layer FAP supply chain and maximize profit through the contracts among the supply chain members.

A three-layer FAP supply chain that consists of a fresh produce e-commerce enterprise, third-party logistics service provider (TPLSP) and community convenience store under e-commerce environment is considered. New game models are developed and optimal decisions in centralized and decentralized channel are characterized. Different contract coordination mechanisms are designed to improve the supply chain performance. Finally, computational studies are conducted.

The decentralized supply chain cannot be coordinated by a freshness-keeping cost-sharing contract, and it can be coordinated by a freshness-keeping cost-sharing and revenue-sharing contract. The optimal unit online selling price, unit logistics distribution price, fresh-keeping effort and unit self-collection service price can all be achieved.

The paper provides a practical guideline to managers in fresh produce industry in terms of how to cooperate with other supply chain members so as to maximize total profit and achieve Pareto improvement while also supply the freshest and safest produce to the target market under e-commerce environment.

Few studies have explored the coordination of three-layer FAP supply chain under e-commerce environment with TPLSP and community convenience store’s participation in decisions, especially considering that the market demand for FAPs is affected by freshness and unit online selling price. In this paper, all these scenarios are taken into account and corresponding mathematical models are developed. In particular, different contract coordination mechanisms are designed and examined simultaneously.

This study examines the potential of contracts as one of the supply chain coordination mechanisms under competitive conditions. It also investigates a two-echelon supply chain model with two manufacturers and two retailers to develop a competitive structure in grey stochastic demand.

Supply chain demand is considered as a stochastic phenomenon depending on the selling price of the product. Also, products can be replaced by market manufacturers. Each retailer faces the pricing of products from two manufacturers, leading to competition between downstream retailers. In the present study, the duopoly supply chain model was presented based on the wholesale price contract, revenue-sharing contract and quantity discount contract separately.

Grey optimization and analysis of their coordination were presented. The results showed the high performance of revenue-sharing contracts in the supply chain. Thus, manufacturers will give the next priority to quantity discount contracts.

Ordering is the main factor contributing to competitive decision-making. Meanwhile, decision-making along with ordering and pricing will be required due to the nature of the demand.

The purpose of this paper is to study the impact of collaboration between supply chain entities in a dyadic setting where the manufacturer invests in greening and technology adoption effort leading to a price premium effect for the supply chain players.

The paper uses game theoretic approach to analyze the model of inter-firm interaction in a vertical channel setting consisting of a retailer and manufacturer. The paper studies strategic decisions of the channel members in a decentralized and centralized structure and extends this to decision making under contractual settings.

A two-part tariff completely coordinates the green supply chain, while a cost sharing and revenue sharing contract only achieve partial coordination. Nevertheless, a cost sharing, as well as a revenue sharing contract, increases the greening and technological adoption effort by the manufacturer while yielding the supply chain members a strictly larger profit. Furthermore, a revenue sharing contract in comparison to a cost sharing contract, leads to a larger greening and technological adoption effort by the manufacturer, lower wholesale and retail prices and a strictly larger profit for both the manufacturer and the retailer.

This paper contributes to the green supply chain pricing, technology and contract literature considering strategic interactions between a manufacturer and retailer in a supply chain under price premium effects of greening activities and technological advancements.

The purpose of this paper is to investigate capacity coordination in services supply chain (SSC). It provides discussion and application of various contracts in a two-stage single period SSC.

This paper considers a two-stage serial supply chain with demand uncertainty and price insensitivity. A model is developed to represent a global IT SSC incorporating services specific factors like over-capacity cost and higher degree of substitution resulting in flexibility to meet unplanned demand. At first, centralized and competitive solutions of the model are studied. Then, the paper studies coordination in this supply chain using some of widely used contract templates.

This paper finds several key insights for the researchers and practitioners in this area around adverse impact of over-capacity cost on demand, positive effect of delivery team’s exposure to market on contracting terms and better understanding of efficient frontiers for selected contracting mechanism.

This paper has limited its analysis to three key and most widely used contracts and made assumptions about risk-neutrality of the firms. Future research can study other contracting templates and/or relax for the model as laid out in this paper.

An automated software agent can be built leveraging the closed form equations developed here to help decide on optimal capacity investment and devise coordinating contracts.

This paper established that because of higher degree of substitution, perishability and non-trivial over-capacity cost, SSC behave bit differently than the physical goods supply chain and coordination of participating firms needs to be studied in a services specific context for improving system-wide performance.

Many supply contracts are employed in practice to improve the performance of supply chains. But there is a lack of research that can offer guidance to practitioners in choosing the best supply contract among a group of popular contracts. This paper aims to fill this gap by developing an intelligent rule‐based supply contract design system for choosing the best contract and its parameters from a supplier's point of view.

The approach used in this paper is based on the comparison of several supply contracts that are encountered in supply chain practice. The paper aims at identifying the conditions under which one supply contract outperforms another from the supplier's perspective. To facilitate the implementation of the decision‐making rules that are developed in this research, an intelligent decision support system is developed.

Six popular contracts are analysed; returns policy (RP), quantity discount (QD), target rebate (TR), backup agreement (BA), quantity flexibility (QF), and quantity commitment (QC). The main findings are: QD contracts generate larger expected profits for the supplier than TR contracts do when the demand is exogenous, an RP contract is better than a QD contract when the wholesale profit margin is sufficiently large and that the optimal QC contract always provides a higher expected service level than BA and QF contracts.

The paper presents an approach for developing an intelligent supply contract design system that can offer guidance to practitioners in choosing the best supply contract for a particular supplier.